Actually App Store is more like a consignment business model, for virtual goods. NOTE many goods and services sales are facilitated by Apps but do NOT result in payment to Apple.
That's not exactly the way Apple's Luca Maestri framed it, and his statements to that effect are being used by the opposition IIRC. He says the sale is Apple's, who then shares a portion of it with developers, rather than devs paying Apple.
FWIW if Apple were a consignment shop they would claim the entire sale, and record the portion paid out to the consignee as a business expense AFAIK. I don't believe Apple does the same with the App Store accounting-wise but I don't know for certain. If they do then it seems to me it would be proof enough of standing for SCOTUS to allow the lawsuit to proceed. Even if they don't I think that's going to be the decision anyway. That doesn't mean the plaintiffs will win their class-action case tho.
Apple's position is that the App Store is a two-sided marketplace. It acts as a principal in selling distribution services to app developers.
Not according to Maestri when addressing stockholders, and that's why it's being included as evidence that Apple considers the users to be the customer rather than the developers in the antitrust lawsuit. Quote: "For some of the services, such as the App Store, we share a portion of the value of each transaction with the app developer and only recognize revenue on the portion that we keep."
I agree that for accounting purposes Apple may not treat it as such, but Apple does consider the transactions to be between Apple and the end-user and not the developer and end-user according to that statement filed with a 2016 quarterly supplemental. That's speaks to the crux of what SCOTUS is being asked to consider.
I'm not sure what the contradiction you see is.
As I said in the post you quoted (which you left out when you quoted it): "It [Apple] also acts as an agent in selling apps to end users for app developers."
Apple doesn't dispute that on one side of the two-sided marketplace, the end user is the customer. It sells apps to those customers as an agent for app developers.
The accounting practice that Mr. Maestri referred to in that quote is the same accounting practice I referred to. It doesn't demonstrate that Apple is the principal, in such app sales, rather than an agent. That settlement flow doesn't mean that Apple is the principal. An agent can collect the proceeds from a sale and pass through that portion of the proceeds which the principal is entitled to. That quote from Mr. Maestri, about Apple's accounting practices, supports the notion that it is acting as an agent rather than as a principal when it comes to app sales to end users.
Whether or not Apple's position as to the role it plays is accepted is another matter. But what I suggested is what Apple's position is. It's the principal on one side of the marketplace (selling services to app developers) and an agent on the other side (selling apps to end users).
(This isn't especially important, but I had meant to include it in the previous post and for future reference: If we were dealing with a consignment, the app developers would be consignors not the consignees. Apple would be the consignee. That's a common mistake made in keeping straight which party is called the consignor and which is called the consignee. The person owning something and turning it over to someone else to sell is the consignor. The consignee is the someone accepting it and trying to sell it.)
It's not a contradiction. I agreed with you on the technicalities if you re-read my post.
The reason I responded as I did is you were seemingly dismissive of the importance of Maestri's statement and Apple's previous positions as it regards the SCOTUS review. For the casual readers who may not understand what we're discussing that case is not about whether the Apple is violating antitrust law but whether the parties making that claim have standing to question it.
Apple claims they do not have an interest as any transactions are between them and the developers. Apple would have the courts believe that if anyone should be sued, and no one should, it's on the developers to do so and not app buyers.
When the AppStore was a new thing that Apple created from scratch, and was the only game in town 30% did not seem unreasonable. There are lots of options now, lots of app stores, albeit not for iOS. 30% does seem a bit high now.
However, while I think the 30% for apps could be debated, I've never understood the 30% for subscriptions. The AppStore hosted the app, it has nothing to do with Spotify's servers or Microsoft's Office365 servers. I've always been uncomfortable with Apple getting a cut of an external subscription service revenue just because they hosted the app.
I’m quite comfortable with Apple taking a reasonable cut for allowing a developer to use software Apple created on a device Apple created and available to billions of customers in a store Apple created. That’s a fair trade for people who are reaping the benefits of Apple’s considerable risk and investment.
Except the costumer paid for that device Apple made, so who made it is irrelevant. They may also have paid for the software. Apple's investment is paid back when they sell their machines NOT with what people use them for.
There are valid arguments for the app store fees, but the fact that Apple sold you the machine you're using isn't one of them.
When the AppStore was a new thing that Apple created from scratch, and was the only game in town 30% did not seem unreasonable. There are lots of options now, lots of app stores, albeit not for iOS. 30% does seem a bit high now.
However, while I think the 30% for apps could be debated, I've never understood the 30% for subscriptions. The AppStore hosted the app, it has nothing to do with Spotify's servers or Microsoft's Office365 servers. I've always been uncomfortable with Apple getting a cut of an external subscription service revenue just because they hosted the app.
It has everything to do with where people sign up, why they signed up and who manages the subscription. These companies pay nothing to host their App on the Apple store. If they have the marketing pull to sign them up themselves and not have Apple manage this relationship, then they could have always done as they are doing now. If Apple was concerned about that the free App option would not exist. So, bring your own customers for free or uses our customer base and we manage the subscription and share revenue. I fail to see the issue. Also, if the service provided under the subscription is good enough to maintain the relationship for a year the cut goes down to 15% as the initial acquisition cost which I’m sure factors in the App Store advertising budget has been adequately recouped. So, it’s not because the host the App. It’s because the App is leveraging their platform and consumer trust and goodwill to get them to signup and stay signed up. For instance I would never give my credit card info to Microsoft, Google, Netflix or any company who could be easily bought and policies highjacked by the new company. The request for my credit card usually ends with me hitting the cancel button. These companies knew this and used Apple to have access to their customers during their growth phase. Now that they have a significant base of their own, they want to cry foul. That to me is foul.
You would never give your credit card info to Microsoft? I highly doubt another company is going to be buying Microsoft or Google anytime soon. That’s just FUD. The majority of my monthly bills are on my credit card. Not once has it been compromised. I’m not worried.
Oh, I see.
Since you've never had your card compromised it means that nobody else has? There is a very real benefit to having your credit card stored with a single entity and being allowed to purchase a million different Apps from various developers without having to pass your card to dozens of smaller companies. It's also why a lot of people like Amazon - one single account to buy multiple items.
While I agree it's odd not to trust someone like Microsoft with your credit card, that doesn't take away from the fact that it's always better to have your card on file with as few places as possible.
You mentioned smaller companies. Netflix isn’t a smaller company. Neither is Microsoft or Google. Nobody is arguing that Apple handling payment processing isn’t beneficial for smaller companies/app developers. Apple taking 30% or 15% of digital content isn’t about credit card processing.
Actually App Store is more like a consignment business model, for virtual goods. NOTE many goods and services sales are facilitated by Apps but do NOT result in payment to Apple.
That's not exactly the way Apple's Luca Maestri framed it, and his statements to that effect are being used by the opposition IIRC. He says the sale is Apple's, who then shares a portion of it with developers, rather than devs paying Apple.
FWIW if Apple were a consignment shop they would claim the entire sale, and record the portion paid out to the consignee as a business expense AFAIK. I don't believe Apple does the same with the App Store accounting-wise but I don't know for certain. If they do then it seems to me it would be proof enough of standing for SCOTUS to allow the lawsuit to proceed. Even if they don't I think that's going to be the decision anyway. That doesn't mean the plaintiffs will win their class-action case tho.
Apple's position is that the App Store is a two-sided marketplace. It acts as a principal in selling distribution services to app developers.
Not according to Maestri when addressing stockholders, and that's why it's being included as evidence that Apple considers the users to be the customer rather than the developers in the antitrust lawsuit. Quote: "For some of the services, such as the App Store, we share a portion of the value of each transaction with the app developer and only recognize revenue on the portion that we keep."
I agree that for accounting purposes Apple may not treat it as such, but Apple does consider the transactions to be between Apple and the end-user and not the developer and end-user according to that statement filed with a 2016 quarterly supplemental. That's speaks to the crux of what SCOTUS is being asked to consider.
I'm not sure what the contradiction you see is.
As I said in the post you quoted (which you left out when you quoted it): "It [Apple] also acts as an agent in selling apps to end users for app developers."
Apple doesn't dispute that on one side of the two-sided marketplace, the end user is the customer. It sells apps to those customers as an agent for app developers.
The accounting practice that Mr. Maestri referred to in that quote is the same accounting practice I referred to. It doesn't demonstrate that Apple is the principal, in such app sales, rather than an agent. That settlement flow doesn't mean that Apple is the principal. An agent can collect the proceeds from a sale and pass through that portion of the proceeds which the principal is entitled to. That quote from Mr. Maestri, about Apple's accounting practices, supports the notion that it is acting as an agent rather than as a principal when it comes to app sales to end users.
Whether or not Apple's position as to the role it plays is accepted is another matter. But what I suggested is what Apple's position is. It's the principal on one side of the marketplace (selling services to app developers) and an agent on the other side (selling apps to end users).
(This isn't especially important, but I had meant to include it in the previous post and for future reference: If we were dealing with a consignment, the app developers would be consignors not the consignees. Apple would be the consignee. That's a common mistake made in keeping straight which party is called the consignor and which is called the consignee. The person owning something and turning it over to someone else to sell is the consignor. The consignee is the someone accepting it and trying to sell it.)
It's not a contradiction. I agreed with you on the technicalities if you re-read my post.
The reason I responded as I did is you were seemingly dismissive of the importance of Maestri's statement as it regards the SCOTUS review. For the casual readers who may not understand what we're discussing that case is not about whether the Apple is violating antitrust law but whether the parties making that claim have standing to question it.
Apple claims they do not have an interest as any transactions are between them and the developers. Apple would have the courts believe that if anyone should be sued, and no one should, it's on the developers to do so and not app buyers.
A few things:
(1) In my first post I was (I thought) mostly agreeing with you when it came to what Apple's position was. I was being more precise about it though. I was also confirming what you indicated you thought was the case when it comes to Apple's accounting for App Store sales.
(2) In your follow up post, you seemed to indicate that Mr. Maestri's statement represented Apple (or maybe just Mr. Maestri) taking a different position than that which I described. You said... "Not according to Maestri..." in response to me describing what Apple's position is But Mr. Maestri's statement, which you quoted, doesn't represent a different position than that which I described. That settlement flow (which Mr. Maestri described) doesn't make Apple the principal rather than the agent.
(3) I think you are missing some nuance when it comes to what Apple's position is. It didn't take the position that any transactions are between app developers and end users. It didn't take the position that it doesn't sell apps to end users. It sells those apps - it is absolutely involved in the transactions - to end users, just as an agent rather than as a principal. That's what happens on one side of the two-sided marketplace.
However, Apple's position is that the the plaintiffs don't allege that Apple has monopolized apps. If that were the case - if the issue was Apple's monopolization of iOS apps - then Apple's role in the app purchase transaction might matter. But, rather, the plaintiffs allege that Apple has monopolized app distribution services. And Apple's position is that it offers such distribution services to app developers, not to end users. Therefore, end users don't have standing to sue because their supposed harm comes from pricing decisions made by app developers. Under the Supreme Court's decision in Illinois Brick v Illinois (1977), alleged pass-through harms don't provide indirect purchasers with standing to sue for alleged antitrust violations. One key, from Apple's perspective, is that it doesn't choose the prices of apps. If end users are harmed by its alleged anticompetitive behavior, it would be through supposedly higher app prices. But app developers set those prices. Apple just tells app developers, whatever price you choose, we'll take 30% of it.
To say it another way (Apple's position is): If the plaintiffs alleged that Apple monopolized iOS apps, then Apple's role in selling apps to them would matter. But that's not what they allege (as successfully doing so would be problematic). They instead allege that Apple monopolizes app distribution services. And when it comes to such services, end users are indirect purchasers under Illinois Brick and thus don't have standing. App developers are the direct purchasers of app distribution services, which is the alleged monopolized market.
So... Apple isn't saying... We aren't the one selling apps to end users so they don't have standing to sue us. It's saying... We aren't selling app distribution services to end users, we're selling them to app developers.
In this case, the pass-through issue is clear and unavoidable, and not the least bit lessened by Apple’s role in selling and delivering apps to iPhone users. Respondents do not allege that Apple monopolized apps, but rather distribution services, an entirely different “upstream” product that consumers do not purchase at all. In that context, the transactional connection between Apple and app purchasers is not meaningful for the Illinois Brick issue. The Eighth Circuit understood this twenty years ago, holding that a direct transactional relationship with consumer-plaintiffs does not matter when the complaint is about alleged anticompetitive conduct that first affects someone else (concert venues in that case, app developers here), and the prices consumers pay are inflated, if at all, because of how those other parties react to the allegedly anticompetitive conduct.
Of course, consumers also transact with the App Store: on the consumer-facing side of the platform, Apple acts as the developers’ selling agent, as is typical in electronic commerce. This makes Apple a “seller” in the same transactional sense that a travel agent “sells” airline tickets (for airlines). But that is not the end of the Illinois Brick analysis. One needs to go on and ask the exact questions the district court asked here: who is setting the price, and what does that mean for the plaintiffs’ damages theory? Otherwise one hasn’t even started the Illinois Brick analysis, which is about pricing, not logistics. And that is especially important in the case of an agency-based platform like the App Store, since the “key distinction between the reselling and agency selling formats” is that “in agency selling the retail prices are decided by the manufacturer, whereas in reselling they are decided by the e-tailer.” This means that while consumers such as Respondents may be dealing with Apple, they are buying apps at prices set solely by iOS developers. That is what matters to Illinois Brick.
In this case, the pass-through issue is clear and unavoidable, and not the least bit lessened by Apple’s role in selling and delivering apps to iPhone users. Respondents do not allege that Apple monopolized apps, but rather distribution services, an entirely different “upstream” product that consumers do not purchase at all. In that context, the transactional connection between Apple and app purchasers is not meaningful for the Illinois Brick issue. The Eighth Circuit understood this twenty years ago, holding that a direct transactional relationship with consumer-plaintiffs does not matter when the complaint is about alleged anticompetitive conduct that first affects someone else (concert venues in that case, app developers here), and the prices consumers pay are inflated, if at all, because of how those other parties react to the allegedly anticompetitive conduct.
Of course, consumers also transact with the App Store: on the consumer-facing side of the platform, Apple acts as the developers’ selling agent, as is typical in electronic commerce. This makes Apple a “seller” in the same transactional sense that a travel agent “sells” airline tickets (for airlines). But that is not the end of the Illinois Brick analysis. One needs to go on and ask the exact questions the district court asked here: who is setting the price, and what does that mean for the plaintiffs’ damages theory? Otherwise one hasn’t even started the Illinois Brick analysis, which is about pricing, not logistics. And that is especially important in the case of an agency-based platform like the App Store, since the “key distinction between the reselling and agency selling formats” is that “in agency selling the retail prices are decided by the manufacturer, whereas in reselling they are decided by the e-tailer.” This means that while consumers such as Respondents may be dealing with Apple, they are buying apps at prices set solely by iOS developers. That is what matters to Illinois Brick.
Long as App owners make good money on IOS, they may complain but better to make good money than none.
The thing is app store is ideal for low volume app developers. Effectively Apple handle the stuff an independent developer doesn’t have time for. It is when you can sell hundreds of thousands or even millions of copies that Apples 30% really suck.
When the AppStore was a new thing that Apple created from scratch, and was the only game in town 30% did not seem unreasonable. There are lots of options now, lots of app stores, albeit not for iOS. 30% does seem a bit high now.
However, while I think the 30% for apps could be debated, I've never understood the 30% for subscriptions. The AppStore hosted the app, it has nothing to do with Spotify's servers or Microsoft's Office365 servers. I've always been uncomfortable with Apple getting a cut of an external subscription service revenue just because they hosted the app.
I’m quite comfortable with Apple taking a reasonable cut for allowing a developer to use software Apple created on a device Apple created and available to billions of customers in a store Apple created. That’s a fair trade for people who are reaping the benefits of Apple’s considerable risk and investment.
I can understand that for Apps. The only question is if 30% is still a reasonable amount. It might be. I don't know.
When the AppStore was a new thing that Apple created from scratch, and was the only game in town 30% did not seem unreasonable. There are lots of options now, lots of app stores, albeit not for iOS. 30% does seem a bit high now.
However, while I think the 30% for apps could be debated, I've never understood the 30% for subscriptions. The AppStore hosted the app, it has nothing to do with Spotify's servers or Microsoft's Office365 servers. I've always been uncomfortable with Apple getting a cut of an external subscription service revenue just because they hosted the app.
It has everything to do with where people sign up, why they signed up and who manages the subscription. These companies pay nothing to host their App on the Apple store. If they have the marketing pull to sign them up themselves and not have Apple manage this relationship, then they could have always done as they are doing now. If Apple was concerned about that the free App option would not exist. So, bring your own customers for free or uses our customer base and we manage the subscription and share revenue. I fail to see the issue. Also, if the service provided under the subscription is good enough to maintain the relationship for a year the cut goes down to 15% as the initial acquisition cost which I’m sure factors in the App Store advertising budget has been adequately recouped. So, it’s not because the host the App. It’s because the App is leveraging their platform and consumer trust and goodwill to get them to signup and stay signed up. For instance I would never give my credit card info to Microsoft, Google, Netflix or any company who could be easily bought and policies highjacked by the new company. The request for my credit card usually ends with me hitting the cancel button. These companies knew this and used Apple to have access to their customers during their growth phase. Now that they have a significant base of their own, they want to cry foul. That to me is foul.
Maybe Apple should have a cut of the first month of the subscription, or the first six months. Or maybe no free subscription Apps. I don't know. but Apple getting a cut from Spotify forever because three years ago they hosted an app that someone downloaded just feels iffy.
But Apple’s still performing accounting services for in-app subscription services, which (potentially) justifies continued revenue from part of the subscription sales.
Long as App owners make good money on IOS, they may complain but better to make good money than none.
The thing is app store is ideal for low volume app developers. Effectively Apple handle the stuff an independent developer doesn’t have time for. It is when you can sell hundreds of thousands or even millions of copies that Apples 30% really suck.
That’s the whole thing, really. Hit apps are like hit songs. No one knows for sure when something will be a hit and those hits are partially covering for the vast number of low-selling apps. It would be the height of foolishness for Apple to leave money on the table when they don’t need to.
John Gruber chatted about this with Ben Thompson on his latest podcast. They both agreed that it was ridiculous for Apple to be taking a cut of others digital content sales. Ben referred to it was rent seeking; Apple taking the cut just because they can. They also agreed that it’s poor user experience that Apple doesn’t let an app like Netflix at the very minimum tell you where to go to sign up or better yet offer a link in app to redirect to Safari or a web view where you can sign up. And as I’ve said before if Apple deserves a cut of Netflix subscriptions (I don’t think they do) then they sure as hell deserve a cut of every Lyft or Uber transaction.
Doesn’t Apple get a fraction of a cent fee for ApplePay transactions? i don’t get why they haven’t adjusted rules to allow low stress services sign up in App with ApplePay as a trade to allow sign up links in Apps.
Agreed Apple shouldn’t get a cut of any service unless they add real value surely ApplePay can be the value add for external services provided by Apps.
In this case, the pass-through issue is clear and unavoidable, and not the least bit lessened by Apple’s role in selling and delivering apps to iPhone users. Respondents do not allege that Apple monopolized apps, but rather distribution services, an entirely different “upstream” product that consumers do not purchase at all. In that context, the transactional connection between Apple and app purchasers is not meaningful for the Illinois Brick issue. The Eighth Circuit understood this twenty years ago, holding that a direct transactional relationship with consumer-plaintiffs does not matter when the complaint is about alleged anticompetitive conduct that first affects someone else (concert venues in that case, app developers here), and the prices consumers pay are inflated, if at all, because of how those other parties react to the allegedly anticompetitive conduct.
Of course, consumers also transact with the App Store: on the consumer-facing side of the platform, Apple acts as the developers’ selling agent, as is typical in electronic commerce. This makes Apple a “seller” in the same transactional sense that a travel agent “sells” airline tickets (for airlines). But that is not the end of the Illinois Brick analysis. One needs to go on and ask the exact questions the district court asked here: who is setting the price, and what does that mean for the plaintiffs’ damages theory? Otherwise one hasn’t even started the Illinois Brick analysis, which is about pricing, not logistics. And that is especially important in the case of an agency-based platform like the App Store, since the “key distinction between the reselling and agency selling formats” is that “in agency selling the retail prices are decided by the manufacturer, whereas in reselling they are decided by the e-tailer.” This means that while consumers such as Respondents may be dealing with Apple, they are buying apps at prices set solely by iOS developers. That is what matters to Illinois Brick.
If you already knew what Apple's argument was, then why were you making statements about Apple's position which weren't correct? And why did you offer Mr. Maestri's quote as being contrary to Apple's current position? It isn't contrary to Apple's current position. It may be contrary to what you thought Apple's current position was, or contrary to a mischaracterization of Apple's current position. But it's consistent with Apple's actual current position.
Apple's position isn't that end users aren't customers (they are on one side of the two-sided market). Its position isn't that it does "not have an interest as any transactions are between them and the developers." Apple sells apps to end users, as an agent of app developers. It handles the transactions, collects payments, and passes along app developers' shares. It doesn't argue to the contrary. What it argues is that the logistics of the app purchasing transactions don't matter, as it isn't apps which are supposedly monopolized.
Actually App Store is more like a consignment business model, for virtual goods. NOTE many goods and services sales are facilitated by Apps but do NOT result in payment to Apple.
That's not exactly the way Apple's Luca Maestri framed it, and his statements to that effect are being used by the opposition IIRC. He says the sale is Apple's, who then shares a portion of it with developers, rather than devs paying Apple.
FWIW if Apple were a consignment shop they would claim the entire sale, and record the portion paid out to the consignee as a business expense AFAIK. I don't believe Apple does the same with the App Store accounting-wise but I don't know for certain. If they do then it seems to me it would be proof enough of standing for SCOTUS to allow the lawsuit to proceed. Even if they don't I think that's going to be the decision anyway. That doesn't mean the plaintiffs will win their class-action case tho.
Apple's position is that the App Store is a two-sided marketplace. It acts as a principal in selling distribution services to app developers.
Not according to Maestri when addressing stockholders, and that's why it's being included as evidence that Apple considers the users to be the customer rather than the developers in the antitrust lawsuit. Quote: "For some of the services, such as the App Store, we share a portion of the value of each transaction with the app developer and only recognize revenue on the portion that we keep."
I agree that for accounting purposes Apple may not treat it as such, but Apple does consider the transactions to be between Apple and the end-user and not the developer and end-user according to that statement filed with a 2016 quarterly supplemental. That's speaks to the crux of what SCOTUS is being asked to consider.
Actually App Store is more like a consignment business model, for virtual goods. NOTE many goods and services sales are facilitated by Apps but do NOT result in payment to Apple.
That's not exactly the way Apple's Luca Maestri framed it, and his statements to that effect are being used by the opposition IIRC. He says the sale is Apple's, who then shares a portion of it with developers, rather than devs paying Apple.
FWIW if Apple were a consignment shop they would claim the entire sale, and record the portion paid out to the consignee as a business expense AFAIK. I don't believe Apple does the same with the App Store accounting-wise but I don't know for certain. If they do then it seems to me it would be proof enough of standing for SCOTUS to allow the lawsuit to proceed. Even if they don't I think that's going to be the decision anyway. That doesn't mean the plaintiffs will win their class-action case tho.
Apple's position is that the App Store is a two-sided marketplace. It acts as a principal in selling distribution services to app developers.
Not according to Maestri when addressing stockholders, and that's why it's being included as evidence that Apple considers the users to be the customer rather than the developers in the antitrust lawsuit. Quote: "For some of the services, such as the App Store, we share a portion of the value of each transaction with the app developer and only recognize revenue on the portion that we keep."
I agree that for accounting purposes Apple may not treat it as such, but Apple does consider the transactions to be between Apple and the end-user and not the developer and end-user according to that statement filed with a 2016 quarterly supplemental. That's speaks to the crux of what SCOTUS is being asked to consider.
I'm not sure what the contradiction you see is.
As I said in the post you quoted (which you left out when you quoted it): "It [Apple] also acts as an agent in selling apps to end users for app developers."
Apple doesn't dispute that on one side of the two-sided marketplace, the end user is the customer. It sells apps to those customers as an agent for app developers.
The accounting practice that Mr. Maestri referred to in that quote is the same accounting practice I referred to. It doesn't demonstrate that Apple is the principal, in such app sales, rather than an agent. That settlement flow doesn't mean that Apple is the principal. An agent can collect the proceeds from a sale and pass through that portion of the proceeds which the principal is entitled to. That quote from Mr. Maestri, about Apple's accounting practices, supports the notion that it is acting as an agent rather than as a principal when it comes to app sales to end users.
Whether or not Apple's position as to the role it plays is accepted is another matter. But what I suggested is what Apple's position is. It's the principal on one side of the marketplace (selling services to app developers) and an agent on the other side (selling apps to end users).
(This isn't especially important, but I had meant to include it in the previous post and for future reference: If we were dealing with a consignment, the app developers would be consignors not the consignees. Apple would be the consignee. That's a common mistake made in keeping straight which party is called the consignor and which is called the consignee. The person owning something and turning it over to someone else to sell is the consignor. The consignee is the someone accepting it and trying to sell it.)
It's not a contradiction. I agreed with you on the technicalities if you re-read my post.
The reason I responded as I did is you were seemingly dismissive of the importance of Maestri's statement and Apple's previous positions as it regards the SCOTUS review. For the casual readers who may not understand what we're discussing that case is not about whether the Apple is violating antitrust law but whether the parties making that claim have standing to question it.
Apple claims they do not have an interest as any transactions are between them and the developers. Apple would have the courts believe that if anyone should be sued, and no one should, it's on the developers to do so and not app buyers.
I have conflicting feelings about this. I like the walled garden. I want Apple to vet apps to protect my privacy and prevent nefarious actions. I'm even willing to pay a little more to have that assurance.
If the Apple App Store is declared anti-competitive and alternative outlets are sanctioned, my fear is that apps I want will move out of Apple's App Store and into one that has fewer restrictions and lower margins. That would mean I'd have to choose between doing business with a distributor that may be less trust-worthy than Apple, or continue to only use Apple's App Store but then have live without certain apps.
On the other hand, that Walled Garden has been shown to have some really lazy or incompetent guards at the gates, often allowing bad guys to get in anyway. It may not be the norm, or even very common, but it only has to happen once for my security to be compromised. If Apple can't protect me anyway, what's the point of preventing others from offering alternative outlets?
In this case, the pass-through issue is clear and unavoidable, and not the least bit lessened by Apple’s role in selling and delivering apps to iPhone users. Respondents do not allege that Apple monopolized apps, but rather distribution services, an entirely different “upstream” product that consumers do not purchase at all. In that context, the transactional connection between Apple and app purchasers is not meaningful for the Illinois Brick issue. The Eighth Circuit understood this twenty years ago, holding that a direct transactional relationship with consumer-plaintiffs does not matter when the complaint is about alleged anticompetitive conduct that first affects someone else (concert venues in that case, app developers here), and the prices consumers pay are inflated, if at all, because of how those other parties react to the allegedly anticompetitive conduct.
Of course, consumers also transact with the App Store: on the consumer-facing side of the platform, Apple acts as the developers’ selling agent, as is typical in electronic commerce. This makes Apple a “seller” in the same transactional sense that a travel agent “sells” airline tickets (for airlines). But that is not the end of the Illinois Brick analysis. One needs to go on and ask the exact questions the district court asked here: who is setting the price, and what does that mean for the plaintiffs’ damages theory? Otherwise one hasn’t even started the Illinois Brick analysis, which is about pricing, not logistics. And that is especially important in the case of an agency-based platform like the App Store, since the “key distinction between the reselling and agency selling formats” is that “in agency selling the retail prices are decided by the manufacturer, whereas in reselling they are decided by the e-tailer.” This means that while consumers such as Respondents may be dealing with Apple, they are buying apps at prices set solely by iOS developers. That is what matters to Illinois Brick.
If you already knew what Apple's argument was, then why were you making statements about Apple's position which weren't correct? And why did you offer Mr. Maestri's quote as being contrary to Apple's current position? It isn't contrary to Apple's current position. It may be contrary to what you thought Apple's current position was, or contrary to a mischaracterization of Apple's current position. But it's consistent with Apple's actual current position.
Apple's position isn't that end users aren't customers (they are on one side of the two-sided market). Its position isn't that it does "not have an interest as any transactions are between them and the developers." Apple sells apps to end users, as an agent of app developers. It handles the transactions, collects payments, and passes along app developers' shares. It doesn't argue to the contrary. What it argues is that the logistics of the app purchasing transactions don't matter, as it isn't apps which are supposedly monopolized.
Carnegie, OF COURSE Apple's courtroom argument may emphasize a point of view re:the App Store that favors them in a courtroom venue. They may also present a point of view that emphasizes Apple's involvement as more than "just an agent" in other situations such as PR and stockholder declarations. . Both can be true and not entirely contradictory.
It would appear that SCOTUS may not be convinced that the courtroom stance is as accurate as the one they've taken with users and stockholders which implies far more than an agent status. Of course that's only based on early indications from the questions and expressed doubts from the hearing. The actual ruling may or may not lean that same way.
In any event Apple quite obviously offers different pictures of the same model depending on the audience. The question then becomes which is more accurate, their courtroom defense or their public proclamations and promotion.
Comments
The reason I responded as I did is you were seemingly dismissive of the importance of Maestri's statement and Apple's previous positions as it regards the SCOTUS review. For the casual readers who may not understand what we're discussing that case is not about whether the Apple is violating antitrust law but whether the parties making that claim have standing to question it.
Apple claims they do not have an interest as any transactions are between them and the developers. Apple would have the courts believe that if anyone should be sued, and no one should, it's on the developers to do so and not app buyers.
There are valid arguments for the app store fees, but the fact that Apple sold you the machine you're using isn't one of them.
(1) In my first post I was (I thought) mostly agreeing with you when it came to what Apple's position was. I was being more precise about it though. I was also confirming what you indicated you thought was the case when it comes to Apple's accounting for App Store sales.
(2) In your follow up post, you seemed to indicate that Mr. Maestri's statement represented Apple (or maybe just Mr. Maestri) taking a different position than that which I described. You said... "Not according to Maestri..." in response to me describing what Apple's position is But Mr. Maestri's statement, which you quoted, doesn't represent a different position than that which I described. That settlement flow (which Mr. Maestri described) doesn't make Apple the principal rather than the agent.
(3) I think you are missing some nuance when it comes to what Apple's position is. It didn't take the position that any transactions are between app developers and end users. It didn't take the position that it doesn't sell apps to end users. It sells those apps - it is absolutely involved in the transactions - to end users, just as an agent rather than as a principal. That's what happens on one side of the two-sided marketplace.
However, Apple's position is that the the plaintiffs don't allege that Apple has monopolized apps. If that were the case - if the issue was Apple's monopolization of iOS apps - then Apple's role in the app purchase transaction might matter. But, rather, the plaintiffs allege that Apple has monopolized app distribution services. And Apple's position is that it offers such distribution services to app developers, not to end users. Therefore, end users don't have standing to sue because their supposed harm comes from pricing decisions made by app developers. Under the Supreme Court's decision in Illinois Brick v Illinois (1977), alleged pass-through harms don't provide indirect purchasers with standing to sue for alleged antitrust violations. One key, from Apple's perspective, is that it doesn't choose the prices of apps. If end users are harmed by its alleged anticompetitive behavior, it would be through supposedly higher app prices. But app developers set those prices. Apple just tells app developers, whatever price you choose, we'll take 30% of it.
To say it another way (Apple's position is): If the plaintiffs alleged that Apple monopolized iOS apps, then Apple's role in selling apps to them would matter. But that's not what they allege (as successfully doing so would be problematic). They instead allege that Apple monopolizes app distribution services. And when it comes to such services, end users are indirect purchasers under Illinois Brick and thus don't have standing. App developers are the direct purchasers of app distribution services, which is the alleged monopolized market.
So... Apple isn't saying... We aren't the one selling apps to end users so they don't have standing to sue us. It's saying... We aren't selling app distribution services to end users, we're selling them to app developers.
https://appleinsider.com/articles/18/11/27/supreme-court-questions-apples-arguments-over-app-store-antitrust-suit
i don’t get why they haven’t adjusted rules to allow low stress services sign up in App with ApplePay as a trade to allow sign up links in Apps.
Agreed Apple shouldn’t get a cut of any service unless they add real value surely ApplePay can be the value add for external services provided by Apps.
Apple's position isn't that end users aren't customers (they are on one side of the two-sided market). Its position isn't that it does "not have an interest as any transactions are between them and the developers." Apple sells apps to end users, as an agent of app developers. It handles the transactions, collects payments, and passes along app developers' shares. It doesn't argue to the contrary. What it argues is that the logistics of the app purchasing transactions don't matter, as it isn't apps which are supposedly monopolized.
You said this:
If the Apple App Store is declared anti-competitive and alternative outlets are sanctioned, my fear is that apps I want will move out of Apple's App Store and into one that has fewer restrictions and lower margins. That would mean I'd have to choose between doing business with a distributor that may be less trust-worthy than Apple, or continue to only use Apple's App Store but then have live without certain apps.
On the other hand, that Walled Garden has been shown to have some really lazy or incompetent guards at the gates, often allowing bad guys to get in anyway. It may not be the norm, or even very common, but it only has to happen once for my security to be compromised. If Apple can't protect me anyway, what's the point of preventing others from offering alternative outlets?
It would appear that SCOTUS may not be convinced that the courtroom stance is as accurate as the one they've taken with users and stockholders which implies far more than an agent status. Of course that's only based on early indications from the questions and expressed doubts from the hearing. The actual ruling may or may not lean that same way.
In any event Apple quite obviously offers different pictures of the same model depending on the audience. The question then becomes which is more accurate, their courtroom defense or their public proclamations and promotion.